Standing Committee B

[Mr. Bill O'Brien in the Chair]

Proceeds of Crime Bill

Clause 311 - Director's general Revenue functions

Nick Hawkins: I beg to move amendment No. 421, in page 180, line 10, leave out 'criminal' and insert 'unlawful'.

Bill O'Brien: With this it will be convenient to take the following amendments: No. 422, in page 180, line 14, leave out 'criminal' and insert 'unlawful'.
 No. 483, in clause 320, page 185, line 10, leave out 'Criminal' and insert 'Unlawful'. 
 No. 424, in page 185, line 14, leave out 'criminal' and insert 'unlawful'. 
 No. 425, in page 185, line 18, leave out second 'criminal' and insert 'unlawful'.

Nick Hawkins: The amendments were suggested by the Law Society of Scotland. We considered them carefully and we believe that again, it is on to a good point. The amendments suggested by the society that we debated last week produced interesting debates, which we have all read in Hansard. It was certainly the Minister's view that the Law Society of Scotland had made some valid points.
 There is particular advantage in the amendments before us, in that they would ensure consistency in the complex terminology between parts 5 and 6 of the Bill. The idea that it is important for such terminology to be consistent was mirrored in last week's discussions. It is important that a distinction be drawn between criminal and civil proceedings. Under the Bill, the director of the Assets Recovery Agency will discharge Revenue functions only when criminal proceedings are already concluded or when the Lord Advocate in Scotland has already decided not to proceed with a criminal prosecution. It is appropriate therefore to draw a distinction between the type of conduct that will come within the ambit of this part of the Bill and that which will be dealt with under its criminal provisions. By changing the word ''criminal'' to the word ''unlawful''—a change from which the other amendments would flow—such a distinction would be achieved. I shall listen with interest to what the Minister has to say.

Paul Stinchcombe: Clause 246 defines unlawful conduct as conduct that is unlawful under the criminal law of the country. As a matter of clarification, may I ask what the amendment would add to that?

Nick Hawkins: Part 6 refers to ''criminal'' conduct, and changing that to ''unlawful'' conduct would make the provision consistent with clause 246. As I have said, the purpose of the amendment is to ensure
 consistency between parts 5 and 6 of the Bill. At present there is no such consistency. As the hon. Gentleman rightly says, unlawful conduct is defined under clause 246.

Norman Baker: Will the hon. Gentleman clarify whether he is seeking to make a material difference to the Bill, or is simply engaged in a tidying-up exercise?

Nick Hawkins: There are distinctions between criminal conduct and unlawful conduct, but it would be helpful if there were consistency between parts 5 and 6 of the Bill.

Paul Stinchcombe: What are the differences between unlawful conduct and criminal conduct, in light of the definition under clause 246? Does the hon. Gentleman include within the definition of ''unlawful'' actions in breach of planning control?

Nick Hawkins: I must confess that I have not considered such action in respect of planning control. The Minister may shed some light on the subject in his response. However, ''unlawful'' conduct can go wider than merely criminal conduct. I shall have to think further about the implications of what the hon. Gentleman has just said about planning control. I need not take up the Committee's time further now, but a more lengthy discussion may arise from what the Minister says in his response.

Bob Ainsworth: The use of the term ''unlawful conduct'' in part 5 of the Bill is intended to reflect the fact that civil recovery and cash forfeiture proceedings are civil matters. Part 2, which we have already discussed at length, and part 7, which we will discuss later this week, clearly refer to criminal proceedings, so the use of the term ''criminal conduct'' is appropriate in those provisions.
 I accept that, in most circumstances—as my hon. Friend the Member for Wellingborough (Mr. Stinchcombe) pointed out—there is no material difference between the two terms. Unlawful conduct has been defined in relation to conduct that is unlawful under the criminal law. However, part 5 proceedings are civil proceedings, and involve proving something to the civil standard of proof and applying the civil rules of evidence. In those circumstances, it would make no sense to use the word ''criminal''. 
 The amendments would not, however, remove the references to ''criminal property'' currently contained in part 6. Moreover, the reasons for using the term ''unlawful conduct'' in part 5 are not relevant to part 6. The term ''criminal conduct'' in this case is used in the context of the gateway that dictates whether the director may exercise his taxation function.

Nick Hawkins: Surely the point is that parts 5 and 6 are civil, rather than criminal, in nature. It would therefore be more consistent to use the same terminology in both those parts. That would mark the distinction that the Minister has been talking about between the civil and the criminal parts of the Bill. We will return to that matter when we discuss part 7.

Bob Ainsworth: We shall have the opportunity, either in the stand part debate or when we consider the more substantial amendments that follow, to discuss more widely the interaction between the Revenue and the director, and that the way in which he does his job. Part 5 dictates the civil proceedings. That is why different terminology was used in that part of the Bill.

Norman Baker: I confess that I am having difficulty following what the Minister is saying. Is he arguing that the words ''criminal'' and ''unlawful'' are synonymous, or that the term ''unlawful'' is wider than the term ''criminal'', and therefore inappropriate—or is he simply saying that the terminology chosen reflects that part of the Bill, and not making any comments on the meaning of the words?

Bob Ainsworth: The latter, fundamentally. The use is different. It is not the same as what is defined in part 5, because those are issues that will appear in print in the civil courts. The reason for using the wording in part 6 is to provide a clear understanding, and it is important that we satisfy the Committee as to how we structure the Bill in that regard. We must ensure that the way in which the director operates his tax functions is clear and well defined. There should be an absolute minimum spillover into any other functions, and certainly no spillover into the way in which the Revenue operates. Those are important issues. People will need to be satisfied that we are not changing the way in which the Revenue operates. We are providing a clear gateway defining when the director can make an application to have a case transferred to his jurisdiction.
 The purpose of the terminology is to define that gateway and to make it clear when something ceases to be within the realms of the Revenue and enters the realms of the director. We think that the terminology in the Bill is the most appropriate. It is not the same terminology as is necessary in part 5, to be used in front of the civil court.

Paul Stinchcombe: I am still slightly confused. Criminal conduct is defined in clause 320 and unlawful conduct is defined in clause 246. However, it is defined as conduct that is
''unlawful under the criminal law''.
 What is the real difference between the terms?

Bob Ainsworth: As I said, we see no material difference between the two terms. It was important to use the correct terminology in part 5, and my hon. Friend will have noticed that the Opposition gave no clear answer when asked what the amendments would achieve by changing the wording in part 6.

Dominic Grieve: I shall speak about this at greater length in a moment, but there is a distinction, because there has been differentiation between criminal and unlawful conduct throughout the Bill. An assertion that a person has committed a crime is usually backed up by a conviction for that crime. If a person has not been convicted, their conduct, although it may constitute a crime, is described simply as unlawful.
 I think that I am correct in saying—although I shall be grateful if the Minister will clarify this—that the taxation provisions can be enforced even when no crime has been proved against an individual. In such circumstances, would it not be better to follow the way in which the rest of the Bill is drafted and describe the person's conduct as unlawful rather than criminal?

Bob Ainsworth: Let me continue and say what I was going to say, because it touches on this important issue, which the hon. Gentleman and others may wish to explore on other amendments or during the clause stand part debate.
 We must provide a clear gateway through which the director exercises his tax functions if he has reasonable grounds to suspect that income arises as a result of a person's criminal conduct. When considering the reasonable suspicion test, it is natural to refer to criminal rather than unlawful conduct, because many police powers that operate in the context of the criminal law depend on a reasonable suspicion test. Once the gateway criterion is met, unlike what happens under part 5 proceedings, the director is not required to prove in civil proceedings that conduct contrary to the criminal law has occurred. In fact, after the gateway criterion is met, the conduct is irrelevant. Therefore there is no reason why we should refer to unlawful rather than criminal conduct. 
 The question is who deals with the person's tax accounts during the set period. There should be a clear definition of when the director may apply for the transfer of the accounts. The trigger for that is a case passing the reasonable suspicion test that the property's source is criminal conduct. That is clear, and further clarity is not gained by changing the word to ''unlawful''.

Norman Baker: I do not want to flog this subject to death, but the Minister did not answer the points made by his hon. Friend the Member for Wellingborough and the hon. Member for Beaconsfield (Mr. Grieve). Will he answer a simple question? Does he understand the word ''criminal'' to mean the same as the word ''unlawful'', or is it different?

Bob Ainsworth: We do not believe that changing the word would make a material difference. It would certainly not make the issue clearer than it is under the gateway test of the director's reasonable suspicion that the property against which he intends to make a tax demand is the product of criminal activity. I believe that that is clear, and I do not think that the amendment would make an improvement.

Paul Stinchcombe: I am afraid that I simply do not understand why we use two terms with different definitions to define the same kind of conduct.

Bob Ainsworth: We use them in two different parts of the Bill for two different purposes. That is all that I can say to my hon. Friend. Part 6 is about taxation powers, not about civil recovery, which is dealt with in part 5. We believe that ''criminal'' is the appropriate word, and unless someone can think of some good arguments about how to improve on it, what is the purpose of changing it?

Nick Hawkins: I suggest that there is a philosophical difference, which my hon. Friend the Member for Beaconsfield has sought to advance. There is also the question of the definition of ''unlawful conduct'' in clause 246, to which the hon. Member for Wellingborough has drawn attention. Clause 246 states that unlawful conduct is established
''on a balance of probabilities'',
 whereas criminal conduct is normally decided to the standard of ''satisfied so sure'', or, by the old test, beyond reasonable doubt.

Bob Ainsworth: I have tried to tell the hon. Gentleman about the gateway, which provides not for the raising of tax but for the director to apply to the Board of Inland Revenue to take control of tax affairs for a set period. The gateway is that the director has reasonable grounds to suspect that property is the product of criminal activity. I have yet to hear anything from the hon. Gentleman that challenges our definition as the most appropriate one.

Mark Field: Given the dancing on a pinhead that we have done about the meaning of words ''unlawful'' and ''criminal'', will the Minister tell the Committee the distinction, for a director who is considering the tax implications, between criminal conduct and unlawful conduct? Why is our term so unsatisfactory that he thinks it impossible to take our amendment on board?

Bob Ainsworth: I have already said that we cannot find any material difference. I have nothing to add to that.

David Tredinnick: I am not a lawyer, but I find the debate confusing and disturbing. It seems that we are using different terminology to mean the same thing in different parts of the Bill. Why do we use different terminology? In the interests of elucidation, we should use one simple term for one condition.

Bob Ainsworth: The different parts of the Bill do different things. It is beyond me why any hon. Member should be surprised that different terminology is used in different parts. Part 2, which deals with criminal confiscation, uses terminology for the initial freezing of assets different to that used in part 5. As parts of the Bill are to be used in different ways, there is no reason why terminology appropriate to the powers provided in those parts should not be used.
 The only issue of substance is that of reasonable doubt. Criminal conduct is not always proved beyond reasonable doubt; the balance of probabilities applies to criminal conduct in part 2. There is no issue about levels of proof; I am not suggesting that. I have yet to hear an argument that shows that the proposed change would make a material difference. 
Mr. Boris Johnson (Henley) rose—

Bob Ainsworth: I give way to the hobbit.

Boris Johnson: I am grateful to the elf—or the orc, or however the Minister styles himself. There is an
 elementary difference between the words ''criminal'' and ''unlawful''. ''Unlawful'' is surely synonymous with illegal. It is possible to imagine something that is illegal but not criminal. I am not a lawyer, but you guys are meant to be able to work out that sort of thing.

Bob Ainsworth: I do not know what else I can do, other than repeat myself. We are trying to provide a gateway to show the circumstances in which a person's tax files can be transferred from the Revenue to the director. The terminology that we have chosen to use is that the director has ''reasonable grounds to suspect'' that the origin of whatever he is investigating—which is most likely to be property—is criminal gain. That is the gateway that we have provided. I do not understand how the amendment would improve on that, and therefore I am not minded to accept it.

David Tredinnick: I am sorry to press the Minister, but we have still not resolved the issue of whether the two terms mean something different. I see no reason why we should use one term in one part of the Bill and another term in another part. The House has Committees to consolidate legislation and make things clearer. They are specifically intended to avoid complication, as the Joint Committee on Statutory Instruments does all the time.
 I understand the Minister's point. The phrase is convenient, perhaps the flow of English is better this way, and it is, perhaps, more meaningful to a lay person. However, learned counsel all over the Room are expressing anxieties about the definition, so it behoves him to tell the Committee that he will consider the matter. The Committee's purpose is to find such issues, which some clever Mr. Carman, for example, will light on in a trial, make much fun of and use to mock everyone and tie the jury up in knots because he is so clever with words, as are many hon., and learned, Gentlemen—who are cleverer than those of us who are not learned—

Bill O'Brien: Order. This is a long intervention.

David Tredinnick: I do not want to pursue the matter further, but the issue is of paramount importance, and the Minister has not yet convinced me. He should generously say that he will reconsider it.

Bob Ainsworth: I think that we have shown at various times in Committee that when substantive issues are raised, we are more than happy to consider them, and we intend to continue to do so. As I said, I see no material difference between the terms, but it is right to use terminology in one part of the Bill that is appropriate to that part. I do not envisage that causing great confusion or ridicule. If I did, I should be happy to consider the matter—but I do not.

Ian Davidson: Does the Minister agree that this is one of those debates about how many angels can dance on the head of a pin, and that although it is a criminal waste of the Committee's time, it is not, unfortunately, unlawful?

Bob Ainsworth: That says it all.

Dominic Grieve: That intervention by the hon. Member for Glasgow, Pollok (Mr. Davidson) typifies what the
 Committee should avoid. He said that something was criminal behaviour, but unfortunately, it was not unlawful. He used the expression ''criminal'' as a colloquial term, but used the word ''unlawful'' in its correct meaning. That is exactly the problem.
 I agree with the Minister that changing the definition as we suggest would make no difference in practical terms. ''Unlawful'' can have a wider definition than ''criminal'', but the definition in the earlier clause—''unlawful conduct'' is conduct that constitutes a criminal offence—would narrow it down. ''Unlawful conduct'' can cover both criminal conduct and conduct that is outside the sanctions of the criminal law. 
 I do not want to get bogged down, but I refer in passing to the mention made of planning law. People who breach planning law can usually be proceeded against in the civil courts for an injunction, or prosecuted. In so far as people can be prosecuted for a breach of planning law, it would constitute a criminal offence that would fall within this section as it stands—or as it would stand if we were to amend it.

Paul Stinchcombe: I participated in an enforcement notice inquiry into action, or use of land, that breached planning controls. The man involved became a millionaire in two years, before proceedings could take place under an enforcement notice.

Dominic Grieve: The hon. Gentleman points to the difficulties involved in enforcement in planning cases, with which I am familiar. A person who carries out work on the land in breach of planning law is, depending on the precise circumstances, guilty of committing a criminal offence. I have prosecuted such people.

Paul Stinchcombe: Will the hon. Gentleman give way?

Dominic Grieve: No I shall not give way, as I do not want to get bogged down. [Hon. Members: '' Oh!''] All right, I will give way, although the point is somewhat tangential. A breach of the planning laws may give rise—and in my experience has given rise—to criminal offences for which people have been convicted.

Paul Stinchcombe: I suspect that the hon. Gentleman may have prosecuted people who were in breach of an enforcement or condition notice. He would certainly not have prosecuted anyone for simply carrying out development without planning permission.

Dominic Grieve: I understand the point that the hon. Gentleman is trying to make, but the enforcement notice is an administrative act that alerts people to the fact that they have breached planning laws. Failure to comply with the enforcement notice gives rise to the criminal offence. So, via the enforcement notice, a person who is in breach of planning regulations is on the road to committing a criminal offence.

David Tredinnick: Will my hon. Friend give way?

Dominic Grieve: No, I wish to move on to the main point.
 Ultimately, the Committee can make words mean whatever we want. We could introduce a ''high treason'' clause, and then, under the interpretation clause, say that high treason related only to offences under the Road Traffic Offenders Act 1988. The clause would become law, but it would be nonsense. I accept the difficulty of defining terms precisely, but the choice of words matters. 
 I shall now give way to my hon. Friend the Member for Bosworth (Mr. Tredinnick) before moving on.

David Tredinnick: On another important issue concerning prosecutions in planning matters, Mr. Longwill, in my constituency—[Interruption.] I seek to remain in order, and I will be brief. Mr. Longwill was prosecuted for consistent breaches of enforcement orders and went to prison. In support of the point made by my hon. Friend, I emphasise the fact that breaches of planning law are cases upon which the criminal law bears, and we should recognise that.

Dominic Grieve: My hon. Friend is right. In my discussion with the hon. Member for Wellingborough, we approached the problem from two different directions. I took his initial comments to suggest that breaches of planning laws did not give rise to criminal sanctions. [Hon. Members: ''That is right''.] If no enforcement notice has been served, that may be correct. Nevertheless, an enforcement notice can follow upon such a breach and lead to prosecution, unless it is remedied. I accept that that is a two-stage rather than a one-stage process, but my point was that the criminal law could impinge upon such breaches.
 It is axiomatic in part 6 that there need be no proof of a criminal offence against an individual before the director can take over the board's powers to tax; he need have only ''reasonable grounds to suspect'' criminal conduct. I understand the aim, but an unusual feature of the Bill is that we are starting to call things what they are not, as was discussed in earlier debates on the standard of proof. In fairness, the Minister mentioned that there was a civil standard in part 2. However, the offences that give rise to the confiscation provisions in part 2 must still be proved to a criminal standard. We are confronted with a situation in which the trigger that allows the director to start using fairly draconian powers—which the Committee will examine when it discusses the following group of amendments—is no more than a suspicion of criminal conduct. That is what the Law Society of Scotland is concerned about. 
 At no point in the proceedings under discussion is it necessary for criminal conduct to be proved against an individual. That is why the Law Society of Scotland took the view that it was odd that the trigger should be ''criminal conduct'', because, to an outsider at least, ''criminal conduct'' sounds as if it means conduct that gives rise to a conviction on the standard of proof—that is, a conviction about which one is satisfied and sure. No such standard of proof applies in part 6. Inserting the expression ''unlawful conduct''—while limiting the definition to mean such unlawful conduct as would constitute a criminal offence if it were 
 proved—would meet the Law Society of Scotland's anxiety that there is a creeping inconsistency of language within the different parts of the Bill. 
 The Law Society of Scotland's comments on the matter convinced me that the amendment should be tabled. If I were responsible for drafting the legislation, I would welcome its recommendation, because it would make the legislation more consistent with reality. The Committee should strive to ensure that the wording of the legislation accords with general principles of law, and with what a layman—or any person reading the legislation for the first time—would construe as a relationship with reality. In part 6, criminal conduct does not have to be proved, and the Law Society of Scotland's recommendation is designed to address that fact. It has raised a point that is philosophically and linguistically valid. 
 The Minister has rightly stated that the amendment would not make any difference to the thrust of the legislation. Therefore I commend it to him: it is merely a linguistic—or textual—change, and as it improves the legislation, it should be adopted.

Paul Stinchcombe: I would like the Minister to reconsider his view on this matter. My hon. Friend the Member for Glasgow, Pollok said that our debate was akin to discussing how many angels could dance on the head of a pin, but we need to get the wording of the legislation right to prevent lawyers from being able to have such discussions, at great expense. It is bad practice to use different words to define the same conduct. I am a lawyer, and if I see two different words in a Bill, I automatically assume that they are intended to mean two different things. If it were appropriate, I would dedicate much time and argument to persuading a judge that that was the case.
 The general point that I am raising is especially valid with regard to the provision under discussion, because everyone intuitively knows that ''unlawful'' does not mean ''criminal''; it is a broader term. 
 I raised the point about planning with the hon. Member for Beaconsfield because the two-stage process is relevant to our discussion. The first stage is to breach planning control—to develop without planning permission—which is unlawful. A person who does that can raise millions of pounds. I know of someone who authorised the use of his farmland, which was near Heathrow, for car parking. As farmland it was worth £2,000 an acre, but by authorising its use as a car park, he made more than £1 million in pure profit before an enforcement notice could be served, and subsequently enforced. At that stage his conduct was unlawful; thereafter, it was criminal. 
 In the light of that factual scenario, why are we not making definitions mean precisely what we want them to mean? If the intention is to define identical conduct, identical terminology should be used, and if the intention is to define different conduct, different terminology should be used. If we do not do that, lawyers, whether they are Members of Parliament like me, or simply practising at the Bar„ will strive to argue—perhaps successfully, to the detriment of the 
 intentions of the Bill—that different words must have different meanings, or Parliament would not have enacted them.

David Tredinnick: The Minister may be trying to forge an unholy alliance. For the first time in my life, I find myself in agreement with the hon. Member for Wellingborough, whose constituency is not too far from my own in Leicestershire. If we go down the route that the Minister proposes, the tills will be ringing in the chambers of the Inns of Court. I foresee endless complications and arguments about what is and is not lawful, criminal, and so on. I know that he has eloquently explained why, in his opinion, the definitions in different parts of the Bill must be different—although I was somewhat surprised that while he was making that assertion, I did not see his officials in the Box writing furiously.
 It seems to me that we have reached a critical point in the Bill. We run the risk of allowing it to return to the Floor of the House with this matter unresolved. As the hon. Member for Wellingborough said, the word ''unlawful'' does not mean criminal. It has a different meaning. 
 I shall illustrate the point with a significant planning case from my constituency involving not someone seeking to sell land at Heathrow for development, but a farmer called Alec Longwill, who had an enormous scrap heap of old vehicles, farming implements and equipment, which grew, like Topsy, at a farm near Market Bosworth. Hinckley and Bosworth borough council sought to restrict that unlawful activity. After much pressing and the making of enforcement orders, Mr. Longwill still refused to do anything about his extensive vehicle park, as he was trading in vehicles for farmers, and providing a useful service to part of the community. In the end, the council had to take criminal proceedings against him in connection with another matter—vehicle movements—and he was sent to prison, which is most unusual in a planning case. Not only was his activity unlawful, because it contravened the council's planning procedures and structure plan, but by virtue of his prosecution, conviction and imprisonment, he became a criminal. That is why we need to look at definitions. 
 What is an appropriate definition? To a layman, rather than a lawyer, an appropriate definition is a simple one. We have under discussion two appropriate definitions, which, apparently, are appropriate only in different parts of the Bill. One definition, although it is synonymous with the other, is said to be appropriate in one situation, whereas the other, which is synonymous with the first, is said to be appropriate in the second situation. Heaven knows how many clauses are in the Bill—it is a complex measure—and sometimes those of us who are not lawyers feel as if we are moving through treacle. We have had complex arguments about when civil law and criminal law apply, the niceties of the definitions, the penalties that apply in civil and criminal proceedings—to which the hon. Member for Redcar (Vera Baird) referred—and the reasons why one rather than the other applies. 
 Currently, the Bill contains exchangeable, interchangeable definitions, which can mean the same in one place but not in another. It may make 
 sense to the Minister, and I can understand the idea that it may be convenient to have two definitions, but in the world we live in, criminals can hire expensive lawyers—such as my hon. Friend the Member for Beaconsfield, who may well be jangling the change in his pocket now. He may still be indispensable, as I am sure that he was at one time. [Interruption.] Perhaps he will intervene and correct me if I am paying him compliments that I should not pay him. 
 I am sure that the hon. Member for Redcar, too, would qualify as an expensive barrister, if hired in private practice. [Interruption.] She said something that I did not hear then; I hope that it was not too uncomplimentary. I am just trying to illustrate my point. It would be generous of the Minister to say to the Committee, ''All right, we have had a lengthy debate. There are clearly some concerns and I shall reconsider the matter.''

Mark Field: I endorse my hon. Friend's comments. I was also interested in what was said by the hon. Member for Wellingborough. I can only assume that, unlike Samson, after the shaving of his facial hair, he now has more energy to debate the Bill. Underlying all that has been said—possibly the untold story of why the Minister is so insistent that we continue to use the definition ''criminal'' rather than ''unlawful'' conduct—is, as my hon. Friend the Member for Beaconsfield rightly said, the fact that no criminal act needs have taken place, and the director will have great powers in relation to a range of taxes that we shall discuss later.
 It is for that reason, above all, that the conduct concerned should be described as ''criminal''. In colloquial terms such conduct may be regarded as criminal, but clearly it is not so for the purposes of the criminal law in this country. That disguises the fact that such draconian powers are in the Bill. Such an argument has already been advanced both in Committee and on Second Reading. Firm powers will be handed to the agency and its director, yet no criminal act needs to have taken place. To that extent, therefore, words do matter. I appreciate that from the Minister's point of view, the phrase ''criminal conduct'' brushes under the carpet the fact that there are draconian powers under part 6. That is why we are so insistent that the word ''unlawful'' should be used. It would ensure clarity and not allow expensive lawyers to get their non-criminal clients off.

Bob Ainsworth: We have no intention of brushing the powers in the Bill under the carpet. All that holds me back from going into more detail about how the powers will and will not operate is that that would make our discussions drift far wider than the amendment.
 The hon. Member for Bosworth said that he was concerned not only that I was being intransigent, but that the people in the Box were not writing furiously as I spoke. He should have listened to the hon. Member for Spelthorne (Mr. Wilshire), who said in a previous sitting that when the officials were writing furiously, he realised that he was on to something. Perhaps the hon. Gentleman should recognise that when they are not 
 writing furiously, he is not on to anything, and no one outside the Room is worried. Obviously, I accept that words are important. I do not have a legally trained mind, nor have I put on airs and graces in Committee to pretend that I have. None the less, I require that some argument be put to me—and the only one I have heard is that it is important that the words used in the Bill are consistent. 
 Part 2 refers to matters that will come before the criminal court, so the terminology used is relevant to the criminal legal system. Under part 5, issues will come before the civil courts, so it is important that the terminology used is appropriate to the civil legal system. The matter under discussion is neither a criminal nor a civil matter. 
 My hon. Friend the Member for Wellingborough said that he was anxious to prevent lawyers from making a fortune out of the Bill. From my common-sense approach—rather than a legal-minded one—I wonder in what circumstances lawyers will be able to do that. We are talking about the gateway—under the Bill, that will be defined by Parliament—when the tax affairs of an individual, when appropriate and when the mechanism allows, are handed from the Revenue to the director. That will not occur before the civil court or the criminal court. Our purpose is to decide what we want the director to have to show before he can say that he wants to control a person's tax accounts for a period. Therefore, clarification of our intentions is more important than consistency with other parts of the Bill.

Paul Stinchcombe: Does the Minister not fear that if two different formulations are used within a Bill, lawyers will strive to give them two different meanings, so as to define two different types of conduct?

Bob Ainsworth: I think that both terms are clearly defined. As I have said, the purpose of the clause is to provide a gateway that defines the circumstances in which the Revenue will give up a person's tax affairs for a time. Stating that the director must be satisfied that there are reasonable grounds to suspect that the proceeds that he is pursuing are the product of criminal activity provides a clear gateway.
 If I hear an argument that shows that the Bill would be improved by changing the terminology, I will be more than happy to consider it. Frankly, I have not heard anything to convince me, and I ask hon. Gentlemen to accept that that has not been the case. When I reviewed the list of matters that I had agreed to reconsider under part 2, I was astonished by its length.

Dominic Grieve: The Minister is to be greatly commended for his flexibility in relation to part 2, and the various matters that he said he would consider. Does he not agree that if the point made by the hon. Member for Wellingborough—which I, too, tried to express—were correct, that in itself would be a good reason to alter the wording and thus improve the Bill? The Minister has not really touched on that.

Bob Ainsworth: I do not accept that. If I did, our discussion would have been a lot shorter.

Nick Hawkins: This has been a fascinating debate, because of the extent of cross-Committee and cross-party agreement—with the exception of the Minister. The hon. Member for Wellingborough has backed up in spades what I, and my hon. Friends the Members for Beaconsfield, for Henley (Mr. Johnson), for Cities of London and Westminster (Mr. Field) and for Bosworth, have been saying. It seems that the only person who cannot appreciate the significance of having the same wording in both parts 5 and 6—the civil parts of the Bill—is the Minister. In those circumstances, it is clear that we need to press the matter to a Division.

David Wilshire: Before my hon. Friend finishes, I hope that he will make the obvious point that one of the biggest reasons for supporting the amendment is that it has not required any help from me.

Nick Hawkins: I always welcome help from my hon. Friend the Member for Spelthorne—not least for that intervention—and now I wish to press the amendment to a Division.
 Question put, That the amendment be made:—
The Committee divided: Ayes 8, Noes 12.

Question accordingly negatived.

Dominic Grieve: I beg to move amendment No. 479, in page 180, line 22, at end insert—
'(2A) No general Revenue function shall be exercised by the Director in any case where an enquiry has previously been carried out by the Board into the tax affairs of a person or company for the same period.'.
 I hope that the amendment will provide a better opportunity than the clause stand part debate would allow for a general examination of the manner in which part 6 will work in practice. I must tell the Minister that I have little difficulty with the immediate idea that there may be circumstances in which it will be possible to exercise Revenue functions against individuals when none of the other powers in the Bill may be invoked. However, the power is unusual and I am unsure how it will dovetail with the ordinary powers of the Board of Inland Revenue when dealing with people's tax affairs, especially those of people who have not paid tax on income that they may have received. 
 I recall—the Minister may confirm this—that the fact that a person has an unlawful source of income does not mean that the Inland Revenue cannot tax it. 
 The Revenue may not know about the income, but if it did, it would be able to tax it. During my time as a barrister, I encountered civil court proceedings during which evidence, previously unknown to the Inland Revenue, emerged which, my instructing solicitor explained, led to the Revenue taking an interest in an individual's tax affairs. Therefore, the Revenue already has such powers. 
 At what point, and for what purpose, will the director usurp those powers to fulfil the desire to curb criminality that is set out in the Bill? Either the director or the Inland Revenue will be in a position to exercise the powers, although the sights of the Board of Inland Revenue may not be as focused on them as are those of the director when he performs his functions. I should be grateful to hear in some detail from the Minister about this matter, because we must be careful not to set up an easy-fix solution that enables the director to tax people in a way that the Board of Inland Revenue could not, simply because he cannot work the extensive and fairly draconian powers conferred on him for confiscation and civil recovery. Otherwise, we may end up with a palpable injustice. 
 Those are complex questions, and although I have read part 6, I do not know the answers. The Minister may be able to provide me with information about, and interpretations of, part 6 that I have not been able to work out for myself. Much will depend on the way in which it operates. That raises the issue, which we have previously discussed, of our anxiety about conferring huge discretionary powers that could be abused—although the Minister will reassure us that that is not the intention.

Stephen Hesford: On a point of clarification, is it not almost certain that when the director becomes involved in an exercise of that kind, it will be to consider a period that the Revenue has already examined, as events may come to light some time down the line? Is this not therefore a wrecking amendment?

Dominic Grieve: It was not put forward as a wrecking amendment. I am prepared to accept that the result of my late night drafting may be that I would wreck a portion of the Bill, but that is unintentional. Much may depend on how the Board of Inland Revenue's powers are exercised. Perhaps I am wrong, but I understood that, subject to certain periods of limitation, there would be nothing to stop the board from conducting a further inquiry if information that it did not know about came to light. The Inland Revenue, rather like the Spanish inquisition, is always lurking just around the corner if one has not got it right. My understanding is that the board's powers are unfettered in that respect, so I do not think that the hon. Gentleman is necessarily right.

Stephen Hesford: I am not a tax expert, and I did not intend to delve into this subject too deeply, but is it not true that the Inland Revenue has six years during which it may investigate each tax year?

Dominic Grieve: I am no tax expert either. Perhaps the Minister could give us that information. The Revenue may be subject to a six-year rule for civil recovery cases, but I am not aware that it is subject to any such
 limitation for criminal offences. However, that is not my subject of expertise.

David Wilshire: Having run my own businesses before I became a Member of Parliament, I believe that the distinction is that although the Revenue requires people to keep records for six years, its powers to reconsider a case are not tied in with what is on the mind of the hon. Member for Wirral, West (Stephen Hesford). We may need to do our research before we can say definitively how far back the Revenue's powers can go. As far as I know, the six-year rule applies to paperwork.

Dominic Grieve: My hon. Friend is almost certainly right. Once a period has passed and one no longer has the legal obligation to keep records about an event, it is likely to be difficult for an inquiry to elucidate information about it—and it would not be wrong if one no longer had those records to show the Revenue. That may answer the question asked by the hon. Member for Wirral, West. I am not aware of a time limit beyond which the Revenue cannot bring a prosecution.

Stephen Hesford: I am not sure whether I meant criminal or revenue-collecting investigations.

Dominic Grieve: I am sure that the Minister will be able to enlighten us about that.

David Tredinnick: We ought also to consider the powers of Customs and Excise, because they might have a bearing on the matter.

Dominic Grieve: My recollection is that the powers of Customs and Excise are similar, but I am not an expert on that subject.

David Tredinnick: That may be the case, but is this not an issue that we ought to think about? My understanding is that the powers of Customs and Excise are even more draconian and extensive.

Bill O'Brien: Order. The amendment does not refer to Customs and Excise, and we have dealt with the question of the powers. I wish the hon. Member for Beaconsfield to move on and discuss his general point.

Dominic Grieve: I was bringing my remarks to a conclusion, Mr. O'Brien, when there was a series of interesting interventions.
 The hon. Member for Wirral, West said that this was a wrecking amendment. He is wrong. It is intended to initiate a discussion about the relationship between the powers of the director and those of the Board of Inland Revenue. One way of doing that is to put forward an amendment that says, ''If the Inland Revenue have previously carried out an inquiry, the director should not carry out a further inquiry for the same period.'' However, one could qualify that by adding, for instance, ''unless further evidence has come to light.'' 
 I tabled the amendment to stimulate a discussion, because the Committee should debate the matter. I understand the Government's point of view, but I have 
 niggles of anxiety that we might be introducing a short-cut procedure that could result in unfairness, or a perception of unfairness. I seek reassurance that that will not happen. 
 With regard to part 6 and clause 311, I have a sense that we are introducing a final fallback position for the director, if he cannot get anything else to stick. That might be a good thing, but I need reassurance that it would not lead to a regime so wholly unlike that of the Board of Inland Revenue that it will bring the tax system into disrepute. That issue needs to be addressed.

David Tredinnick: There is also a more general, and simple, concern. We are running the risk of introducing legislation that will allow people to be tried twice. That is a very simplistic lay person's way of expressing the concern—[Interruption.] The hon. Member for Glasgow, Pollok is breaking all the rules of the House by attempting to applaud me by clapping his hands, and I am deeply touched that he should want to do that on this jolly occasion.
 A person might have to jump through two hoops, and that would go against the basic tenets of British justice. By expressing that concern, Opposition Members are not trying to wreck any part of this important Bill.

Ian Davidson: May I describe a scenario to the hon. Gentleman? In a Scottish court, a bad person might receive a not proven verdict. I would be in favour of such bad people having to jump through hoops again. If nobody else can get them, the tax people should be able to get them.

David Tredinnick: The hon. Gentleman raises another interesting point—the fact that there are different approaches in Scotland and in England. Since the Act of Union, Scotland has been able to retain its separate legal system. The Under-Secretary should focus on whether the approach and application are significantly different north and south of border, and on whether, if that is the case, that should be addressed. He shakes his head. It seems unsatisfactory that someone should, in effect, be tried twice—or, to be more technically correct, that he should have to appear before two authorities. Speaking as an Englishman who represents a midlands constituency, I do not think that that rings well. However, the hon. Member for Glasgow, Pollok has told the Committee that in Scotland, when a villain is subject to the middle judgment of not proven—which essentially means that although the accused cannot be pinned down this time, he is certainly not innocent—

Ian Davidson: Not proven means, ''We know he did it, but we can't prove it.''

David Tredinnick: Perhaps English law could learn something from Scottish law on that point. I am not sure whether the Prime Minister will find time for such a Bill during this Session, but there is a case for providing the option of such a judgment in English law.
 We run the risk of introducing a measure that may be seen as unfair and unjust. I look forward to the Minister's reply.

Bob Ainsworth: Issues that rightly concern people have arisen from the discussion. As this is the lead clause in this part of the Bill, it may be appropriate if the debate on the amendment ranges widely, as the hon. Member for Beaconsfield said that he wanted it to. We may lose the opportunity for a clause stand part debate, but this may be the best way to discuss such issues.

Dominic Grieve: I confirm that that seems the sensible way of proceeding. Were we to have a wide-ranging debate on the amendment, I was not going to seek a clause stand part debate, although other amendments that have been tabled raise specific issues. I do not know whether that commends itself to the Committee.

Bob Ainsworth: I think that it has commended itself to you, Mr. O'Brien, as you seem to be nodding approval. That is the most important thing.
 It may be helpful if I try to expand on how the powers are intended to be used. The hon. Member for Beaconsfield said that although the Revenue clearly had powers, he perceived a potential weakness, and there was a potential need for focus. That is exactly what is needed, as the Revenue also has a massive responsibility that ranges across the whole population of the United Kingdom, and it cannot therefore be expected to focus on the need to recover the proceeds of crime for the taxation system, as the director can and will be required to do. The hon. Gentleman said that the powers were unusual, which in the context of British law, they are. However, other jurisdictions in other parts of the world have given taxation powers to agencies that have been effective in recovering the proceeds of crime. 
 The hon. Member for Bosworth said that he was worried about people effectively being tried twice. I accept what the hon. Member for Beaconsfield said—that he did not intend to table a wrecking amendment. It is a wrecking amendment in part, but that was not his intention, which was to prise open the issues for debate. However, I cannot understand how the hon. Member for Bosworth can argue that someone is effectively being tried twice because they are obliged to pay tax on acquisitions that they have clearly made, and on which they have clearly not paid tax in any other way. If he is saying that, I do not think that it will resonate with any of his constituents. I do not think that that was what the hon. Member for Beaconsfield was saying, or that any law-abiding taxpayer in the country will sympathise with such an argument.

David Tredinnick: I am certainly not saying that we should let off offenders who have defrauded the Revenue. My point is that as the Bill stands, the offender may have to be assessed by two separate authorities for the same thing. I question whether that is necessary.

Bob Ainsworth: Let me go through the way in which the matter will be argued. We must bear in mind that we are trying to do two things. First, we will provide focus by introducing an effective power to levy tax where tax has not been paid on criminal gain. Secondly, as the hon. Member for Beaconsfield points out, while doing that we should do the
 maximum to ensure that we do not bring the tax system into disrepute, or distort it, or change its powers or the way in which it operates. If we cannot satisfy people in that regard, there will be worries elsewhere than in the criminal fraternity about the powers that part 6 provides.
 The original performance and innovation unit report on ''Recovering the Proceeds of Crime'' found that many criminal organisations generate substantial revenues that go untaxed. Those enjoying the proceeds of their criminality do so at the expense of the honest taxpayer paying his or her fair share of the tax burden. The use of taxation functions by the director against those enjoying the proceeds of crime will send a clear message that taxation is to be applied fairly and consistently to everyone. 
 The director will operate a hierarchy of options, as I mentioned when we debated part 2. He will consider whether criminal confiscation action is appropriate, and then whether to initiate civil recovery action. Only when those other approaches have been exhausted will the taxation functions arise. For example, the director may be satisfied that there is insufficient likelihood of the success of a civil recovery proceeding based on the available evidence, or he may decide to give priority to other civil recovery cases if he considers that action under part 6 would represent a more effective and efficient use of resources in a particular case. 
 Alternatively, the property may have been acquired outside the specified time limit for civil recovery proceedings to be successful. The code requires that to be six years in normal circumstances, although I am advised that in cases in which fraud is suspected, the Revenue can go back 20 years to determine whether to raise tax levies on income gained fraudulently. In such circumstances, the director will consider whether there are grounds for exercising his Revenue functions. He will not exercise his Revenue functions on the basis of referrals from the Inland Revenue. However, he will liaise with the Revenue to ensure that cases are handled in the most effective way. 
 The director will effectively stand in the shoes of the Board of Inland Revenue for the purposes of taxation. All the tax law that applies to the Inland Revenue will apply to the director, including its powers, such as the ability to raise tax assessments, potentially with penalties and interest, and all the safeguards and rights of protection afforded to the taxpayer. Those will apply equally to the director as to the Board of Inland Revenue. The director will apply the taxation system in the same way as the Inland Revenue, including its extra-statutory concessions. The effect of that is to try to maintain a single taxation system.

David Tredinnick: I am listening to the Minister with great interest, and I am grateful for that detailed and helpful explanation. Am I to understand that the director and the tax officer from the Revenue will sit in conclave and discuss a particular course of action? Will they themselves make a decision about which of them will proceed? Is discretion provided? Will those two people make up their own minds?

Bob Ainsworth: Once the file has been passed to the director, it will be for him to make the decision. He will obviously be able to consult the Revenue about other action and other investigations that have taken place, but we do not want him to become involved in pursuing tax evasion cases and other issues that are regularly handled by the Revenue and to start to invade and double-guess that area of responsibility. We are ensuring that that is not possible. The Revenue will not pass a person's case to the director and suggest that he deal with it on the basis that he might be more effective.
 That is not to say that the Revenue does not have a responsibility to report criminality. If in the course of its normal functions it becomes aware of criminality, it will report that to the police or the Serious Fraud Office, for example. Such information might subsequently find its way into the director's hands, but not straight from the Revenue, because it is not the intention that he should deal with tax fraud and evasion. He will receive his cases from the criminal system and will be obliged to consider all his powers in the hierarchy that we have established. He can be given only cases in which prosecution has been ruled out as ineffective. He must then consider part 2 criminal confiscation or civil action against the individual involved. Only after he has decided that no such action is appropriate or possible in the circumstances should he consider levying a tax on the property.

David Tredinnick: To pursue this further, what is to stop the representative of the Revenue and the director having a quiet word and saying, ''I can't say this, but I can tell you that if you were to think this, it wouldn't be remiss.''? Two Parliaments ago, there was much debate about the register of the poll tax or community charge and council tax and the impact that it would have on the electoral roll—whether the number of people registering on the electoral roll would be reduced because of the fear of being subject to that tax. All sorts of safeguards were supposed to be in place. That may be an abstruse comparison, but I wonder whether a nod and a wink might be inevitable between the two people.

Bob Ainsworth: I understand the hon. Gentleman's point. In some circumstances, that will happen and will be appropriate. What will prevent that from happening is simple: the law. The rules of confidentiality that apply to the Revenue are strongly enforced on all Revenue staff and will apply as much to any discussions that Revenue staff have with the director as to anything else. However, that is not to say that discussions will not take place. When a file is in the director's hands, we would expect him to co-operate and discuss the case as appropriate with the Revenue. We want it to work in that direction, and we shall need a memorandum of understanding on how they conduct their business together. Having received a tax file, the director may need the Revenue to clarify issues about which it knows. We do not want the Revenue to use the director inappropriately to pursue taxpayers.

David Tredinnick: Will such a memorandum effectively be a heads of agreement about how to
 proceed? Will it have force in law? Will it be based on what the remit of either party allows?

Bob Ainsworth: I do not know when we will be able to draft a memorandum and let people examine our proposals. I reassure the hon. Gentleman that we do not intend to allow the Revenue—either directly and openly or by a nod and a wink—to say to the director, ''Here is a case that you ought to be interested in.'' The director should receive his cases from the criminal system and the prosecution agencies, rather than from the Revenue because the Revenue may have pursued the matter unsuccessfully.
 If a case is referred to the director by the prosecution agencies and he decides that his other powers are inappropriate or inoperable and considers whether to raise a tax levy against an individual, he may need to discuss that with the Revenue. We must ensure that that is permitted when it is appropriate. We do not want a free flow of cases from the Revenue to the director. The director will receive his cases only from the prosecuting authorities and the criminal justice system.

David Tredinnick: The Minister says that there will not be fishing expeditions by the director to the Revenue through which he could try to elicit more information than he is entitled to. Did I understand him correctly? He says that the director will approach the Revenue with a specific brief and that safeguards are present to prevent the Revenue from opening other issues with him such as separate cases or previous convictions. How would the safeguards apply in those instances?
 It may help the Minister if I expand on that while he considers the briefing that he has received. I know that it can be difficult for a Minister to reply if he has not read the briefing.

Bob Ainsworth: The director will have powers of investigation and powers that are appropriate to certain parts of the Bill. He will use such powers as are appropriate. The Revenue has its own powers. It investigates tax fraud and taxpayers, and may levy tax on criminal gain.
 We have made it absolutely clear in the Bill that the Revenue cannot pass on a case to the director. The Revenue will not be able to say, ''You have powers under part 4 or part 2 of the Bill. We are certain that this has been going on and if only you use those powers, that will come to light.'' If the Revenue became aware of criminality during its investigations, it would pass on a case not to the director but to the Serious Fraud Office and the police, and there would then be an investigation that would lead to a decision on whether to prosecute. If the police decided that clear criminal gain was involved but that a prosecution was not possible, they would pass on the case to the director to allow him to consider whether the proceeds of crime could be pursued.

Mark Field: A concern that I have comes from a constituency matter with which I have recently dealt. There is an assumption that the police will deal with any case of fraudulence in which a criminal element is involved. In a matter of insolvency, that is not always the case. For example, I am acting on behalf of a
 constituent whose business relied on another business that has become insolvent. There have, apparently, been shenanigans. My constituent's worry—and he has given me a list of the various agencies that he has contacted—is that the moment the business became insolvent, the police said that it was nothing to do with them and that there was now an administrator on board.
 My hon. Friend the Member for Bosworth gave an example of a situation in which the police might not be involved, and if there were a tax-graded issue in an insolvency case, it would be returned—perhaps via the administrator—to the director. That is a worry and it struck me, when dealing with my constituent's situation, as an odd state of affairs. 
 I can understand where the police and the Department of Trade and Industry are coming from. Their view is that it is now a legal process and they should stay out of it. I wonder what comments the Minister has about how that potential problem can be avoided.

Bob Ainsworth: Parts of the Bill dictate how insolvency interacts with the powers of the director. Neither the Revenue nor a person who is put in charge of a company that is in receivership and insolvency will pass on cases to the director.
 With regard to fishing expeditions, the Revenue will not, other than by accident, become aware of criminality. The function of the Revenue is to examine tax fraud and tax evasion. It is not the director's function to investigate such matters. In a case of tax fraud and evasion, the Revenue will keep that file. Under the powers, it will take action against the individual concerned in exactly the same way as it does now. Only if it becomes aware of some other criminality during its investigations will it be obliged—as it is now, we are not changing anything in that regard—to report the matter to the Serious Fraud Office, the police, the National Crime Squad or whoever is appropriate. It will continue to carry out its business in the same way as it does now.

David Tredinnick: I understand what the Minister is saying. If some other matter comes to light while the director is investigating a case, the Revenue will not pass that information to the director, but to the appropriate authority—which, in this case, is the police—for further investigation. The purpose of our exchange has been to tease out a little more information about that interface. He has helpfully done that, and has explained how it works.
 However, the concern must remain that there might a conduit or a possibility of inappropriate behaviour. I qualify that point by saying that we are dealing with villains—the whole point is to try to stop the Revenue being defrauded and to bring to justice the wrongdoers. Nevertheless, to ensure that justice is properly served, we have to consider such aspects.

Bob Ainsworth: And ensure that there is no leakage of inappropriate cases into the hands of the director. The Revenue has its powers and it exercises them. In some circumstances, as the hon. Member for Beaconsfield said, they are fairly wide-ranging. It is appropriate that the Revenue should keep those
 powers and continue to carry out its business in exactly the same way as it does now. We do not want the director to have the ability to do the Revenue's job for it.
 When a case is referred for the confiscation of criminal assets, we want the director to have the same powers as the Revenue. Such referrals will occur only as a result of criminal investigation, not as a result of tax investigation. The tax authorities will have been examining the issues that it is appropriate for them to examine, and if they find certain matters they will not hand on the case to the police or the director but deal with it themselves, as they do now. We have tried to structure the Bill so that it will have no impact on the way in which the Revenue undertakes its job. When the director has control of a person's tax affairs, he will conduct himself in the same way as the Revenue. 
 We are not setting up two different taxation systems. The person will be adjudged for taxation in the same way, whether by the director or by the Revenue. He will be adjudged only by the director in those narrow circumstances in which there is a suspicion of criminal gain and that the origin of the property concerned was criminal. The director will rightly have such cases in his portfolio that have been passed to him by the appropriate authorities. As I have said, he will consider his revenue-raising powers only within the context of the hierarchy, having first gone through the prospects of criminal confiscation and civil recovery. 
 The director will have taxation functions for cases throughout the whole of the United Kingdom, including Scotland. During the Committee's consideration of part 1, I circulated a note setting out the intended relationship between confiscation, civil recovery and Revenue functions. It covered how cases may be referred to the director from Scottish Ministers when they decide not to pursue civil recovery. In such cases, the director may consider using his taxation powers. 
 For each case in which the director wishes to use taxation functions, he must first satisfy a qualifying condition. That is an important condition, because there is no intention under the Bill that there would be any change whatever to the taxation treatment of ordinary taxpayers. Such individuals and businesses will continue to have their taxation affairs dealt with by the Inland Revenue, whose powers will remain unaffected by this part of the Bill. It is important to emphasise that point, because we intend that the director use his taxation functions against only a small number of people in relation to the total taxpaying population. Such individuals or businesses will be able to be the subject of the director's taxation functions only when the qualifying condition has been satisfied. 
 The condition is that the director has reasonable grounds to suspect that income, gain, profits or a transfer of value is chargeable to the relevant tax, and resulted from criminal conduct. It is immaterial whether the conduct was carried out by the person to whom the income, gain, profits or transfer has accrued. In that context, the criminal conduct does not 
 include tax evasion, responsibility for which will still remain with the Inland Revenue. The Revenue's special compliance office will continue to be the body that investigates cases of tax fraud, and the Board of Inland Revenue will continue to be the prosecuting body for cases of tax fraud in England and Wales.

Dominic Grieve: I am grateful to the Minister for going into so much detail about the matter. He has acknowledged that it is most likely that the director of the Assets Recovery Agency will intervene or use such powers only when there is no other power that he can use. In those circumstances, is there not an argument that the only potential offence that has been disclosed is tax evasion? If so, is that not contrary to what the Minister has been saying and would it not become the board's responsibility, given that that would be the only failure that could be pinned against the individual or company concerned?
 Is there not a conflict in that, because the Minister has also explained that the director will be receiving information, and that he will begin to operate, not because the Inland Revenue has passed him something in relation to that person but because the criminal enforcement agencies, including his own, have?

Bob Ainsworth: The hon. Gentleman is right. The director will levy tax in the same way as the Inland Revenue would. The only power that the director will have that is different from those of the Inland Revenue is that he will be able to designate a sourceless tax liability, so that he will not have to prove, beyond doubt, the origin of the taxable item, and the particular act of criminality that led to its acquisition.
 How else can we do what we are trying to do? We are trying to introduce effective powers to use against people who have clearly gained by their criminality—they might own a property or an asset—but we also wish to isolate those powers, because it is important to provide the maximum bulwark against their seeping into the rest of the taxation system. 
 If we were to oblige the Inland Revenue to exercise those powers, we would wind up having to establish an organisation within the Inland Revenue to provide focus, and the gateways would be more difficult to control. The alternative is to remove those powers from the Inland Revenue in the limited circumstances to which I have referred, to provide absolute clarity about when they can be operated by the director, and to insist that he use them in the same manner as the Inland Revenue would. 
 That alternative way would keep the director and the Inland Revenue separate. It also has the potential to provide greater focus, because the director knows exactly what he is after—he knows the kinds of people with whom he is dealing, he has used his other powers against them, and he is now seeking to levy tax from them. That also keeps such matters completely divorced from the tasks that the Inland Revenue performs. For all those reasons, it provides a better structure than any other way of allocating the powers would provide.

David Tredinnick: Again, I am grateful to the Minister for that explanation, as is my hon. Friend the Member for Beaconsfield.
 When we discussed the situation with regard to Scotland, the hon. Member for Glasgow, Pollok eloquently highlighted the differences between English and Scottish law. The Minister has explained that the Inland Revenue's powers cover the entire country—at least, I think that that is the case. Can he confirm that in this case there would be no special difference north of the border? Does his explanation of the matter apply north and south of Hadrian's Wall?

Bob Ainsworth: The differences north and south of the border are addressed in other parts of the Bill. Scottish Ministers will decide whether to pursue civil recovery, so north of the border such cases will effectively be passed between individuals, as the director will have no civil powers. If criminal confiscation has been deemed to be inappropriate, they will be passed to Scottish Ministers who will decide whether to pursue civil recovery. If they decide that civil recovery is not possible or feasible—because time has run out, or because one of the other reasons apply—they will pass the case to the director, who will decide whether to seek to levy tax.
 The taxation powers will operate in exactly the same way north and south of the border. The other powers will be operated in a similar way, but they will be organised in accordance with the Scottish legal system, and they will be exercised by different people, because of the different way in which Scottish administration is structured.

David Tredinnick: Is the Minister saying that those powers will be exercised in the same way, but that they will be operated by different agencies?

Bob Ainsworth: Yes.

Ian Davidson: Let me reassure the hon. Gentleman that things are similar in Scotland. We have income tax, electricity and running water. There are all sorts of similarities.

David Wilshire: You do not have drawing rooms.

Ian Davidson: Not in Pollok. In fact, there are few Conservatives—I am sorry, conservatories—left, as most of them have been eaten.
 I thank the Minister for responding to the points made by the hon. Member for Bosworth, who invited him, as I heard it, to explain—I look forward to the first appearance of that word in Hansard. However, the Minister said at length that it was intended that there would be no leakage of cases. Will he clarify whether there will be leakage of information? It seems essential that information should go backwards and forwards between all the agencies in such circumstances, in order to ensure that one branch of Government is aware of information discovered by other branches. Artificial divisions might scupper cases against people who deserve to be penalised.

Bob Ainsworth: Those are important issues. Appropriate gateways for information are needed, to ensure, on the one hand, that there is not abuse, and on the other, that there is effective action. When the director takes over a particular person's tax file for a
 set period, he will have the whole file. He will therefore have all the information that was available to the Revenue. As I said, we intend to establish a memorandum of understanding to allow for the circumstances in which information is passed between the Revenue and the director. I said earlier that I did not know the point at which it would be possible for that to be shared.
 We have not yet set a memorandum of understanding, and we do not yet have a director of the agency. It was felt that we should allow the director to have input into the memorandum of understanding, rather than tying him hand and foot, before he even exists, as to how he will operate. We therefore intend to draw up the memorandum of understanding after the director is in place. 
 We do not intend that information gained by the director through his powers should then be passed back to the Revenue so that it can be used against the individual by the Revenue in other ways. When the person's tax files cease to be under the control of the director, it is intended that they should be filleted to make certain that the Revenue's powers are not accidentally extended because the director has had other abilities, and has been able to gain other information that the Revenue would not have been able to gain.

David Tredinnick: The Minister focused on the memorandum, which was the subject of an earlier exchange. As I understand it, he is saying that he wants to leave the director some discretion or latitude in terms of the way in which memorandums are assembled. Nevertheless, would it not be sensible to offer guidelines, which are different from direction? That would provide clarity.

Bob Ainsworth: I intended to allow input rather than discretion. We should at least listen to the individual who is expected to do the job thereafter before drawing up the memorandum of understanding that will tie him as to how he does that job.
 I want to continue to fill people in on the Government's intentions. I am certain that there are drawing rooms in Scotland. There are posh people in Scotland, but there are no drawing rooms in the council houses of Pollok—

Bill O'Brien: Order. We should return to the subject under discussion.

Bob Ainsworth: If the qualifying condition is satisfied, the director will assume the responsibility for the taxes or the contributions for the periods in question. He will do that by serving a notice on the Board of Inland Revenue to state that, for certain taxes and contributions and for certain periods, he intends to carry out the general revenue functions as specified in the notice. Effectively, he will choose the most appropriate option for specific case from a menu of taxes or contributions for certain periods. While the notice is in effect, the Board of Inland Revenue will have no role in the tax affairs of the specified person or company to the extent set out in the notice. That is to ensure that a double taxation does not occur with regard to a particular liability.
 However, the clause makes it clear that the director may withdraw the notice at any time, and that he must do that if the qualifying condition ceases to be satisfied. In the event of the withdrawal of the notice, the Revenue will consider the tax obligations of the person or company concerned. 
 The amendment would limit the director's taxation functions to those cases and periods into which the Inland Revenue had not carried out a previous inquiry. There are a number of cases in which, if the Revenue discovers new information following an inquiry, it may carry out a further inquiry. Under section 29 of the Taxes Management Act 1970, it is entitled to raise an assessment notwithstanding the closure of a previous inquiry. Section 29 of that Act sets out the conditions under which such an assessment may be raised. 
 An important feature of this Bill's development has been the maintenance of a single, national and consistent taxation system. The amendment would cause a variation from that because the director would be unable to make further inquiries or raise the discovery assessments that the Revenue may do. Additionally, if new information came to light that demonstrated that a tax assessment or further assessment was appropriate although the Revenue had carried out a previous inquiry into the same period of the same entity's tax affairs, barring the director from raising an assessment would place the subject of his inquiries at an advantage compared with other taxpayers. 
 The amendment implies that the director and the Revenue should not both assess the same tax. I assure the Committee that we do not intend to double-tax in that way, but that only the director will collect the tax, interest and penalties due. If the subject of the inquiry demonstrates that tax on the investigated income and gain was paid to the Inland Revenue, the director will not raise an assessment and he will serve notice of withdrawal. However, it would be a step further to accept the amendment and bar the director from making inquiries into cases that the Inland Revenue may investigate under the Taxes Acts. 
 I urge the hon. Member for Beaconsfield to withdraw the amendment. I hope that I have given a helpful explanation of how the powers will be used.

Dominic Grieve: I am grateful to the Minister for taking the time and trouble to give us an exposition of the background purposes of the Bill and the manner in which he intends it to operate. I intend to withdraw the amendment because he has given me cogent reasons to do so. In any event, the amendment was a probing amendment, designed to stimulate our discussion.
 I want to flag up one issue that I do not intend to develop further now because we will return to it when we discuss my amendment to clause 313, which is in a similar probing mode. The Minister emphasised that a principal reason to reject the amendment is the need to maintain conformity in tax practice. He rightly stated that because the amendment did not contain a reference to further evidence that came to light, it 
 did not conform with section 29 of the Taxes Management Act 1970. We can return to that later. 
 As the Minister explained, the director will have access to far more information with which to pursue his inquiries than the Board of Inland Revenue. I have no difficulty with that. The director will, through the crime prevention system, have access to information that the board would not normally be able to obtain in its investigations. The Minister made it clear that that is one of the reasons why the director will be in a better position to secure tax than the board. As he explained, the file would have to be vetted before it went back to the board, in order to ensure that the director did not pass back information that could subsequently be used for the purposes of ordinary taxation. 
 The Minister touched on the ability to tax when unable to identify the source, an issue to which we shall return under clause 313. That is a profound difference, and is ultimately at the nub of setting up a parallel but separate taxation system. Although I accept what the Minister said, I shall want to consider the issue further when we discuss clause 313. It is an important distinction, and the Committee should understand it. It is not just a matter of the director being the better person to levy tax because he will be more focused on particular people; it is a matter of giving him powers and advantages that the board does not have. 
 I hope that it is clear that we will discuss the subject later—I see the Minister nodding. I alert him to my interest in the topic and agree with him that it would be most unwise to have different powers from those under section 29 of the Taxes Management Act 1970. I am grateful to him for starting the debate and beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn.

Dominic Grieve: I beg to move amendment No. 476, in page 180, line 39, leave out subsection (8) and insert—
'(8) If apart from this section the Board's authorisation would be required for the exercise of a function, such authorisation of the Board must be obtained by the Director before any such function is exercised by him.'.

Bill O'Brien: With this it will be convenient to take amendment No. 478, in clause 315, page 182, line 31, after 'Director', insert 'jointly with the Board'.

Dominic Grieve: In the light of the discussion that we have had, I do not wish to labour the two amendments. However, they raise an issue that was not fully discussed in our earlier debate, so they are worth considering.
 It is axiomatic that, once the director has given notice and seized on a tax issue, it is his decision making and discretion that will be exercised while he decides whether tax should be levied on a person or company. The Minister—I think I understood him correctly—emphasised that he would expect the director to liaise closely with the Board of Inland Revenue about the exercise of his functions. The Committee should consider where the discretionary buck stops. Does it stop with the director or, as I have suggested through my amendments, should a statutory 
 framework require the board to intervene? Should the board's view be sought, and if so, in what circumstances? 
 The two amendments are different. Subsection (8) appears to give blanket power to the director: he can exercise a power that has not been specifically conferred under part 6 without obtaining the board's authorisation. That is a Henry VIII provision. It may be that the powers conferred under part 6 are so wide, extensive and well drafted that the issue will not arise. However, amendment No. 476 seeks to provide that, should the director wish to exercise a power not specifically conferred under part 6, he would have to get the board's permission. 
 The Minister may be able to reassure me—amendment No. 476 is a probing amendment. However, it raises an important issue because subsection (8) appears to give wide powers to the director—potentially wider than the powers described by the Minister in his helpful opening comments. 
 Amendment No. 478 concerns transfers of value under clause 315. With regard to service of a notice, instead of vesting in a director 
''the Revenue inheritance tax functions in relation to the transfer'',
 those functions should be vested jointly with the Board of Inland Revenue. 
 Our debate has thus far concerned mainly income tax. However, clause 315 deals with inheritance tax and, effectively, transfers of value. Different tests and problems may arise or apply in respect of that. Clearly, the board has a great deal of experience in dealing with transfers of value and inheritance tax. My impression is that such matters tend to be dealt with by the capital taxes office—a discrete area in the Inland Revenue. 
 The director may be biting off more than he can chew, which is one reason why I suggested that those functions should be jointly exercised with the board rather than being left to his discretionary powers. What problems does the Minister foresee in relation to such a capital tax as opposed to taxing income in cases in which the source cannot be identified? Separate problems may arise, which is the reason for that amendment. 
 I emphasise that amendment No. 478 is also a probing amendment. I am concerned that we should not be so focused on income tax and the idea of income coming from a source that we do not blind ourselves to the capital tax issues. Indeed, I cannot help thinking that, in the context of criminality, capital tax and taxation of capital assets with no identifiable source may prove to be a better way of raising money than taxing people's income. I see the Minister nodding, so it is all the more important that we get this matter right. I await his comments.

Bob Ainsworth: The operational independence of the director is important if he is to be effective. Clause 2 sets out how the director is to operate his functions. Subsection (5) of that clause requires the director to have regard to any guidance issued to him by the Secretary of State. We debated the matter when we considered clause 2, and I circulated a paper to
 Committee members that further clarified how that will operate in practice.
 The director will be accountable to the Secretary of State for the operation of his functions. He will not be accountable to the Board of Inland Revenue, which is in turn accountable to Treasury Ministers. Clause 2 requires the director to exercise his functions in a way that is best calculated to contribute to the reduction of crime, and he will be accountable to the Secretary of State for his performance in that respect. The Board of Inland Revenue is accountable to Treasury Ministers in the operation of its functions, notably tax collection. Although the Revenue will contribute to the reduction of crime and will work with other Departments in doing so, its primary focus is on the efficient and effective collection of tax, and its performance measures have been developed accordingly. 
 The director's operational independence from the Inland Revenue will enable him to focus his efforts on the requirement that he contribute effectively to the reduction of crime. It is our intention that the director should operate the taxation system in a manner that is consistent with that of the Board of Inland Revenue. An important feature in the development of the Bill has been that a single, national and consistent taxation system should be maintained. The provisions in clause 318 cover that point in full and entitle the Board of Inland Revenue to access documentation and information that it considers appropriate in that respect. 
 Under the amendment, the director would be required to gain the board's authorisation before exercising his taxation functions. That would make the board responsible for the operation of the director's taxation functions, thereby restricting his independence and removing the line of accountability to the Secretary of State. That would limit the director's clear focus on contributing to the reduction of crime, and his freedom to operate within the guidance issued to him by the Secretary of State. It would be a needless bureaucratic stage in the process, as the Board of Inland Revenue can already be assured that the director's operation of the taxation function under clause 318 is consistent with its own functions. 
 Under amendment No. 478, which relates to inheritance tax and adopts a variation on the previous theme, the vesting of inheritance tax functions in the director would be done jointly with the board. The amendment would achieve little in practice. The purpose of clause 315(3) is to vest inheritance tax functions in the director when he has served notice on the Board of Inland Revenue of his intention. Clause 315(6) already provides that that does not divest the board, or an officer of the board, of that function. Providing for vesting to be joint with the director is, therefore, immaterial in providing for either party to be able to perform additional functions.

Nick Hawkins: I may be anticipating a debate that we should have when we discuss clause 315 and inheritance tax. I apologise if the Minister feels that I am doing so. I do not want to stray out of order. However, it is surprising that in this part of the Bill we should be giving the director—who is trying to access
 ill-gotten gains—specific and detailed powers in relation to inheritance tax. Will the Minister explain the thinking behind that?

Bob Ainsworth: The hon. Member for Beaconsfield touched on the matter. It relates to a method of hiding ill-gotten gains by sticking them into a trust or an inheritance. My prejudice is that the provision may prove to be a very effective means of recovering proceeds of crime—perhaps more so than taxing income or revenue. It is not merely a small aside: it is central to how those funds are used and can be put beyond the reach of the current legal system.
 Providing for joint vesting in relation to the director is immaterial. If, as it seems, that means that the director would have to confer with the board about every step in inheritance tax cases handled by his staff, the agency's role would become impossible. The board does not get involved in the day-to-day handling of all Revenue cases, and it would be just as impossible for it to exercise such oversight in relation to the agency's cases. 
 The provision for the board not to be divested of its taxation functions, even when the director has served notice, extends beyond inheritance tax into general taxation functions. That is provided for in subsection (7). I think that I have pointed out that clear lines of accountability are necessary. The tying up of the system is provided for in clause 318. The amendment would not add anything to those lines of accountability. It would do the reverse by blurring them and, potentially, taking them away. I ask the hon. Gentleman to withdraw the amendment.

Dominic Grieve: Again, I am grateful to the Minister for enabling us to widen the scope of the discussion further. He has provided me with some reassurance, and in relation to the amendments, which were probing, he has helped to clarify some of the relationships with the director, and the way in which they operate. I accept that the channel of accountability to the Home Secretary would be blurred if the amendments were accepted. However, one issue remains.
 One of the purposes of the Board of Inland Revenue relates to its independence from political control. Clearly, it must enforce what Parliament says, but it also has wide discretion, and no one would seek to interfere with the way in which it operates—certainly not Treasury Ministers: if they thought that there was a loophole in the law, they might want to introduce further tax legislation, but the board is respected as an impartial arbiter in respect of taxation matters. The director will implement tax law, but as the Minister rightly said, he will do so for a different purpose: to reduce crime, or the proceeds of crime—I cannot remember the precise words that the Minister used. That may give rise to conflict between what is required for proper taxation, and what is required for the crime reduction fund. 
 The Minister emphasised several times during this morning's debate that he wishes the public to be reassured that the director, having taken on the mantle of the Inland Revenue, will operate in exactly the same way and under the same rules—except for one or two 
 areas that we shall examine—so people need not be worried. It is another area in which matters are blurred. The post of the director exists for a different purpose from that of the Inland Revenue. As long as Parliament and the public are satisfied about that, so be it. However, the issue causes me slight anxiety. I am sure that the amendments would not meet that anxiety satisfactorily, but at least they have enabled a discussion to take place about it. 
 I hope that the Minister will bear in mind my argument because I cannot help thinking that the matter may be returned to in the other place, given the unusual way in which something of a parallel taxation system is being created. The words of reassurance that we have heard in that such matters can be handled in exactly the way as they are now may be so, but several indicators show that, when the director intervenes, his motivation and purpose will be different from that of the board of the Inland Revenue and we may receive complaints about the different ways in which the tax system is being operated.

Bob Ainsworth: The director's motivation will not allow him to operate in a different way and outwith the policies laid down by the board. I hope that clause 318 will provide reassurance about how the director will operate within the interpretation that has been developed by the board and is thus at its discretion. His different motivation will dictate his priorities, the cases that he examines and the issues that he pursues. He will not be looking necessarily at maximising return. We had a debate earlier about efficiency and effectiveness. The director will be examining how to reduce criminality and will be using his resources to that end. Does clause 318 give the hon. Gentleman the reassurance that he seeks?

Dominic Grieve: Yes, clause 318 provides much reassurance. If it did not exist, I would be seriously worried about the matter, especially in relation to concessions that are important in an individual's dealings with the Inland Revenue. Such policy must be followed and adhered to. The Minister is right, but I hope that he does not mind my saying that the matter will merit some attention. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 311 ordered to stand part of the Bill. 
 Clause 312 ordered to stand part of the Bill.

Clause 313 - Source of income

Dominic Grieve: I beg to move amendment No. 477, in page 181, line 32, leave out subsection (1).
 This is one of the most important issues that we shall discuss this morning. The clause, more than anything else, is the point at which ordinary taxation law and the powers of the director separate. That may be a good thing, but we must consider it carefully. Subsection (1) states: 
''For the purpose of the exercise by the Director of any function vested in him by virtue of this Part it is immaterial that he cannot identify a source for any income.''
 As I am not as well versed in tax law as I would like to be, it would be helpful if the Minister explained how the system works at present with the Inland Revenue. My understanding is that, before the Inland Revenue levies a tax on income, it must identify a source. The burden to do that is on the Inland Revenue rather than anybody else. That is a complex area and I am not aware of the board's powers and what assumptions, if any, may be made evidentially. We need an explanation. 
 The clause would not be in the Bill unless it had a purpose, which as I understand it is that in the future it will be possible to tax income without the identification of its source. Presumably, the burden will be on the individual or company to rebut the assumption that is made by the director and to show that money came from a source that should not be taxed, such as a gift or a win on the pools. However, income would be liable to taxation, so this is an important additional power. 
 It is all very well to say that the director steps into the Inland Revenue's shoes and is more focused, but we are giving him a power to tax in a way that the board cannot. I want to hear from the Minister how the distinction will work in practice. 
 The amendment is probing. If I had wanted to carry out a comprehensive amendment of the clause, I would have had to table amendments to other subsections. I deliberately did not set out to do that. Subsection (2) would require amendment. However, the matter is important because we have decided to bend or break tax rules for the purpose of reducing crime. We should know what we are doing before we agree to the clause, because we are trying to reduce crime by the mechanism of taxing people.

Bob Ainsworth: I hope that the hon. Gentleman was not saying that I deliberately suggested that the power is not the exception but a power that we are giving overtly to the director that is not part of the taxation system as it is operated at present, because it is.
 The amendment would require the director always to identify the source of any income when he uses his taxation functions. Therefore, it would limit the director's actions, when using his taxation functions, to cases in which he can identify a source of income. 
 There will be a number of cases in which the director will be unable to use criminal confiscation or civil recovery to recover the proceeds of crime. However, in those cases, he may suspect that there is income or gain that results from criminal conduct and he may use his taxation functions as a further means to recover the proceeds of crime. The director would not have been able, through his investigations, to gain evidence at the civil standard that assets are the proceeds of crime, because otherwise he would have pursued the matter under part 5 and sought to confiscate the assets in their entirety. However, he may be suspicious that criminal conduct is a feature of the cases. 
 It follows that many such cases will be characterised by the lack of a clear audit trail of the source of certain assets and their financing. If the director is bound to identify the source of any income or gain, his efforts will be frustrated in the majority of the cases in which he wishes to use his taxation functions. If he is to make effective use of taxation functions, he should not be required to identify the source of income.

Paul Stinchcombe: Why do we need both subsections (1) and (2)?

Bob Ainsworth: Subsection (1) is needed to allow the director to carry out his revenue functions, including that of the making of a no-source assessment, notwithstanding that he has no knowledge of any source for the income or gains. Subsection (2) upholds the validity of the assessment once it is made.
 The appeals that are provided for in other taxation regulations offer safeguards, as they will apply to the director. 
 The Revenue's practice of identifying a source arises as a result of a mixture of legislation in the Taxes Acts and case law. Some judgments in case law have resulted in the Revenue accepting that it must identify a source of income before it makes an assessment, and that has effectively become established in tax law. If we impose that limitation on the director, we will render the powers under part 6 entirely—or almost entirely—inoperable. That is why this single departure from normal taxation law is necessary.

Nick Hawkins: I understand what the Minister has said about subsections (1) and (2), but I am puzzled, because subsection (3) seems to be somewhat circular—although that might be due to my failure to understand it. Although I understand that it is necessary to make specific arrangements with regard to section 29 of the Taxes Management Act 1970, where there is a service on the board of a notice of withdrawal, I do not understand the use of the word ''invalid''. Can he explain why that word is included in subsection (3)?

Bob Ainsworth: Where the director withdraws his notice, he is effectively handing the case back to the normal taxation regime, and we are anxious not to extend the powers of the Revenue. We want the director to use his powers to pursue particular individuals in particular cases, and we also want to keep that separate from the rest of the taxation system. If subsection (3) did not exist, where the notice had been withdrawn, we would effectively be handing back to the Revenue the ability to levy a sourceless tax liability.

Nick Hawkins: That is what I understood to be the intention of subsection (3). I agree with the Minister. I would not want the legislation to extend the Revenue's general powers, and I understand his point that the director is being given special powers that are, for good reasons, wider than those of the Revenue.
 However, I am still puzzled by the use of the word ''invalid'' in subsection (3). I am unsure whether the wording of that subsection will do what the Minister thinks it will. Surely, it should be saying something along the lines of, ''When the director withdraws from 
 the use of his powers, and they return to the Revenue, only the general powers will apply.'' I do not understand why any question of invalidity should arise. Subsection (3) is very oddly drafted.

Bob Ainsworth: There might be a mixture of liability. That is the point that is being addressed. The notice is being withdrawn, and the tax power is effectively being handed back to the normal taxation system. Therefore, the assessment is invalid only to the extent that it does not specify a source of income. If other parts of that assessment do specify a source of income, they remain valid and remain a liability, because those are the powers that the Revenue would have had anyway, had it been in charge of the case in that period. With regard to that part of the assessment where no source of income has been identified, the assessment should be rendered invalid because the Revenue does not have that power.

Nick Hawkins: Would not it be more logical and sensible to put the phrase the other way round? Rather than the assessment being invalid to one extent, the provision could state that it remains valid only where a source for the income is disclosed. Would not that be a neater, more positive and clearer expression?

Bob Ainsworth: It could well be, but I am told that once an assessment has been made, it cannot be unmade, except in accordance with the Taxes Management Act 1970. I hope that that goes some way towards explaining the reasoning behind the wording.

Nick Hawkins: Perhaps I may pursue the point a stage further now by making a short speech, rather than continuing to make interventions. I hope that the Minister will agree at least to reconsider the wording of subsection (3). A tax assessment would not have to be unmade in order to improve the wording. Surely, the provision should state that if the assessment is passed back to the normal Revenue processes, it remains valid where the source of income is specified? It could be rewritten to read, ''Any assessment is valid only to the extent that it does specify a source for the income.'' That would be make the issue clearer, ensuring that everybody understands that when the powers are operated, the normal powers of the Revenue are working only to their proper extent. In other words, subsection (3) introduces a totally unnecessary double negative that is confusing and unclear.

Bob Ainsworth: I do not pretend to be a taxation expert, and I do not think that the hon. Gentleman is one. It is not the first time that I have seen double negatives in legislation, nor will it be the last. I do not pretend to have the skills that parliamentary counsel have. I will, of course, consider the issue that the hon. Gentleman has raised. If the suggested rewording improves the clarity of the Bill, I will certainly consider it.

Dominic Grieve: Again, I am grateful to the Minister for having explained the import and impact of clause 313. We will have, I suppose, to wait to see how it works in practice. I can see the point behind it. Let us suppose that a person finds £25,000 in a cardboard box in somebody's cupboard—I must correct myself at this
 point, because in those circumstances, I expect that the other powers under the Bill would be used. I have a niggling difficulty in trying to think of situations in which the director will want to exercise those Revenue functions because his other powers are insufficient. How would he identify a source of income? If he could not do so, would he say, ''I cannot identify the source, but I'm going to tax it.'' I suppose one example would be when there is a regular payment into a bank account, the source of which cannot be identified.
 If £25,000 is found in a box in somebody's house, that person would probably be prosecuted under other 
 provisions for civil recovery. Alternatively, the confiscation provision could be used. Let us suppose that a person had no previous convictions and the confiscation provisions could not apply. If, on the balance of probabilities, it could not be shown that the money had been acquired through unlawful conduct, the money could be taxed on the basis that the burden would be on the person to show its provenance and demonstrate that it is not income. 
 It being One o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order. 
 Adjourned till this day at half-past Four o'clock.